We measure the size and sources of gains from international diversification using metrics that are independent of currency choices. When we apply these measures to industry sector portfolios for six large equity markets, we find that, offered costless access to a foreign market, investors would...

Black (1988) suggested a two-step rule for discounting uncertain cash flows: (1) form the expectation of the flow conditional on zero excess returns to traded securities in periods before the flow, and (2) discount the conditional expected value as if it were the amount of a certain payment....

Corporate managers typically estimate the value of capital projects by discounting the project's expected future net cash flows at the cost of capital. The capital asset pricing model (CAPM) is generally used to estimate that cost. But, as anyone who has worked on the finance or business...